The internet's only blog on Health Insurance

November 11, 2007

Health care plan needs more work on costs

Assembly speaker Fabian Nunez and Senate President Pro Tem Don Perata have devised a new health care proposal that comes closer to the one advocated by Gov. Arnold Schwarzenegger. However, it is riddled with problems that illustrate why health care reform is such a difficult task.

The idea behind both the governor's and the Legislative leaders' plans is to extend health care insurance to most of the estimated 5 million Californians who are not covered. That is a noble goal, but one not easily achieved without considerable expense and changes in the way medical care is financed and delivered.

Perata and Nunez have moved a bit nearer the governor on health care reform, but neither plan goes far enough in reducing skyrocketing medical costs.

High and rapidly rising medical costs are the main reasons many lower- and middle-income Californians do not have health insurance, and why too many people use emergency rooms as their first choice for medical care.

On the positive side, the Nunez-Perata plan (as well as the governor's) would insure more children with comprehensive benefits.

Also, government subsidies would help low-income adults get similar coverage through the state's Health Families program.

Unfortunately, these benefits come at a considerable cost to businesses and taxpayers. Most employers would have to pay a 6.5 percent payroll tax or provide the equivalent in health benefits for their employees.

Even small businesses, many of which cannot afford to pay health benefits, would have to pay a tax of 2 percent to 4 percent of their payrolls.

But insurance companies would be able to raise monthly rates as they see fit. There would be huge subsidies for private insurers, via tax credits for families earning 250 percent to 450 percent of the federal poverty level to buy private insurance, which would not have price caps.

Nunez and Perata agreed with Schwarzenegger to make health insurance mandatory, something many Democrats and labor unions opposed because of affordability issues.

There would be an exemption from the requirement for people whose insurance costs exceed 6.5 percent of household income. Most insured families or their employers already pay more than 6.5 percent of household income for health care.

November 03, 2007

California among worst in providing health insurance through jobs

The percentage of Californians who get health insurance through their jobs is among the lowest in the country, according to a study released Thursday.

Nationwide, about 63 percent of Americans have health policies offered by their employers. But in California, only 55.7 percent of workers were covered through their jobs last year, making it the state with the fifth-lowest level of employer-sponsored coverage, according to the study by the Economic Policy Institute in Washington.

The number of employers offering health insurance has fallen nationally in recent years due to rising premiums and the diminishing bargaining power of the average worker. Companies have responded to the pressure by requiring employees to pick up a larger portion of the tab, through higher co-payments and monthly contributions, and reducing benefits and coverage for spouses and children.

In California, the problem is worse due to the sheer size of the population and the fact a large number of residents work in jobs that typically do not offer health insurance, such as agriculture, hospitality and the service industry.

According to the study, which uses data from the U.S. Census Bureau's Current Population Survey, the number of Californians covered by their jobs dropped to just under 18 million workers in 2005-2006 from 18.5 million in 2000-2001, or nearly half a million people.

While low-wage workers had the lowest level of coverage, middle-wage employees in California saw the steepest decline in those offered insurance during the past five years. And more than 600,000 fewer children in California were covered by their parents' insurance last year than in 2000.